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DO BY HAND AND ON EXCEL A project has expected cash flows of $55 next year...

DO BY HAND AND ON EXCEL

  1. A project has expected cash flows of $55 next year (year 1). These cash flows will grow at 6% per year through year 6. Growth from year 6 to 7 will be -2%, and this negative growth will continue in perpetuity. Assume a discount rate of 8%. What is the present value today (year 0) of these cash flows? (For this problem, feel free to use Excel, or you can do this by hand using annuity and perpetuity formulas. However, you should be comfortable doing this type of problem either way. If you’re not, I encourage you to do it both ways.)

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